Chinese authorities are considering cutting vehicle purchase tax for passenger cars in an attempt to revive the country's ailing auto industry, it has been revealed today (16th December).

Officials are weighing up the possibility of slashing the tax currently paid by buyers of vehicles with engine sizes of up to one litre from ten per cent to two per cent in order to stimulate purchases.

A complete abolition of the charge is also being discussed, while other proposals include cutting taxes by a smaller proportion on larger vehicles, although the ten per cent rate is likely to remain for engines above four litres.

Wang Chuan Fu, Chairman of Chinese hybrid automaker BYD, said: "Relevant departments are now considering abolishing the vehicle purchase tax for passenger cars below 1.6 litres."

Recent figures have revealed that passenger car sales in China slumped by ten per cent on a year-on-year basis in November, representing the third monthly drop so far this year.

Dong Jianping, the Deputy Secretary General of the China Association of Automobile Manufacturers - which is working with the government on the proposals - has claimed that tax cuts would be the best way to improve sales volumes.

The National Development and Reform Commission is set to make a decision in the first half of 2009.



Source:

China considering cut in car purchase tax -report (16/12/08)
http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSSHA33093420081216